Which of the following statements best defines managerial accounting?
Managerial accounting focuses on reporting financial information to external users.
Managerial accounting is primarily concerned with providing information for internal decision-making.
Managerial accounting is used to calculate taxes and comply with legal requirements.
Managerial accounting deals with auditing financial statements for accuracy.
#2
Which of the following is not a component of the master budget?
Sales budget
Operating budget
Cash budget
General ledger
#3
What is the break-even point?
The point at which total revenue equals total variable costs
The point at which total revenue exceeds total fixed costs
The point at which total revenue equals total fixed costs
The point at which total revenue exceeds total variable costs
#4
Which of the following is a characteristic of a cost center?
It generates revenue
It incurs costs but does not directly generate revenue
It is responsible for both revenues and costs
It is not relevant for managerial decision-making
#5
Which of the following best describes a cost driver?
A factor that directly affects fixed costs
A factor that influences the behavior of costs
A factor that is unrelated to cost behavior
A factor that is only relevant in variable costing
#6
What is the purpose of a cost allocation?
To classify costs as either fixed or variable
To assign indirect costs to cost objects based on some reasonable basis
To calculate the contribution margin
To determine the breakeven point
#7
What is the primary difference between managerial accounting and financial accounting?
Managerial accounting focuses on historical financial data, while financial accounting focuses on future projections.
Managerial accounting is used by internal stakeholders for decision-making, while financial accounting is used by external stakeholders for investment and lending decisions.
Managerial accounting follows Generally Accepted Accounting Principles (GAAP), while financial accounting does not.
There is no difference; managerial and financial accounting are two terms for the same concept.
#8
Which of the following costs would typically be classified as a variable cost?
Rent on a manufacturing facility
Salary of a factory supervisor
Direct materials used in production
Depreciation on production equipment
#9
What is the contribution margin?
Total sales revenue minus total variable costs
Total sales revenue minus total fixed costs
Total variable costs divided by total units produced
Total fixed costs divided by total units produced
#10
What is the formula to calculate the predetermined overhead rate?
Estimated total manufacturing overhead costs / Estimated total units produced
Actual total manufacturing overhead costs / Actual total units produced
Estimated total manufacturing overhead costs / Estimated total direct labor hours
Actual total manufacturing overhead costs / Estimated total direct labor hours
#11
What is the purpose of activity-based costing (ABC)?
To allocate manufacturing overhead based on direct labor hours
To allocate manufacturing overhead based on machine hours
To allocate manufacturing overhead based on activity levels that drive costs
To allocate manufacturing overhead evenly across all products
#12
Which of the following performance measures is calculated as net operating income divided by sales revenue?
Return on Investment (ROI)
Contribution margin ratio
Profit margin ratio
Operating leverage
#13
Under absorption costing, fixed manufacturing overhead costs are:
Expensed in the period they are incurred
Included in product costs and inventoried
Ignored for costing purposes
Reported separately as a period cost
#14
What is the main limitation of using absorption costing?
It provides inaccurate product costs for decision-making purposes
It does not comply with Generally Accepted Accounting Principles (GAAP)
It does not allocate fixed manufacturing overhead costs to products
It may result in overproduction due to fixed overhead absorption
#15
What is the formula to calculate the degree of operating leverage?
(Contribution margin / Net operating income) * Sales revenue
(Contribution margin / Net operating income) * Fixed costs
(Contribution margin / Sales revenue) * Net operating income
(Contribution margin / Fixed costs) * Net operating income